For businesses

Awards for distress and inconvenience – what businesses need to know

Date published: 13 October 2021 Redress

Garry Wilkinson

Principal Ombudsman and Director of Investigation

We’ve refreshed our guidance on making awards for distress or inconvenience. Our approach hasn’t changed, but our stakeholders tell us that more detailed guidance will help financial businesses and their customers reach a fair outcome.

Garry Wilkinson, Principal Ombudsman and Director of Investigation, explains why fair compensation is about assessing the impact on individual consumers.

When something goes wrong, it’s not just about the financial impact. There can be an emotional impact too, because of the stress, worry and practical problems caused by financial disputes. Recognising that and putting it right is often the key to resolving the issue and helping both parties move on.

It's all about the individual impact

Deciding a fair offer of compensation hinges on understanding the impact a mistake has had on an individual.

We sometimes see businesses just focusing on the error rather than on how it’s affected their customer. When handling a complaint, businesses need to ask the right questions about the overall impact – financial, practical and emotional.

Many companies seeking our informal advice on resolving complaints want to know about the right approach to compensation for distress or inconvenience. Where businesses have considered the impact on their customer, sometimes they’re not sure whether an apology is enough, or how much compensation to offer. Financial businesses say they'd welcome more detail about this, to help them reach a fair outcome first time. So, we’ve made that the focus of our refreshed guidance.

Sharing more detail, with more examples

We’re providing more information and insight for financial businesses about the complaints we see that involve making an award for distress or inconvenience.

Our approach hasn’t changed. But the refreshed guidance we've published includes new award ranges, with more detailed descriptions, helping bring to life the reasons behind the levels of awards we make.

In many of the cases we see, we award compensation at the lower end of our award ranges, so we’ve included more case studies to support our customers understand what fair compensation could be in their complaint. There are also more case studies at the upper end so it’s clear the level of award we might make where a mistake has had a more serious impact.

When addressing the emotional and practical impact of a mistake, we most commonly make awards for distress or inconvenience. But our updated guidance also includes more examples of when we might make an award for other types of impact – for example, pain and suffering or damage to reputation.

It’s not always about money. From our surveys and engagement with consumers, we know that a lot of people just want an apology in recognition of what they have been through as a result of the mistake, giving them closure on what has happened. That's why our guidance also provides information about when an apology, without financial compensation, is appropriate.

All on the same page

We have also refreshed our information for consumers, to help them understand when we might make this kind of award – and, if they have made a complaint, to understand whether they’ve been treated fairly.

I'm confident that our refreshed guidance, and the extra detail it provides, will help businesses understand our approach and apply it consistently. And that it will help ensure that we are all on the same page when it comes to fair and reasonable answers.

In summary

  • Getting the level of compensation right hinges on businesses making sure they understand the overall impact of the mistake on the individual consumer.
  • Our guidance provides a more detailed range of awards and more case studies to help businesses put things right.
  • We’ve refreshed our guidance to reflect the awards we make today.
  • We have also refreshed our guidance for consumers, so everyone is on the same page when it comes to fair outcomes.

Read our updated guidance for financial businesses